Profile: Waverton goodbye to Johim

JO Hambro Investment Management’s rebranding as Waverton earlier this month was in some ways merely a change of name above the door, but to chief executive Hugh Grootenhuis it meant much more than that.

‘This is the third chapter in our history,’ he says. ‘The management and the Hambro family owned the business between 1986 and 2001 and then Credit Suisse acquired 100% of the company. We are now going back to the “owner-occupier” model and the rebranding is part of that progression of the business.’

Indeed, the adoption of the Waverton Investment Management name effectively marks the end of ‘Project Josh’, the in-house name given to the sale process, which started at the beginning of 2012 when Credit Suisse put the firm on the market.

‘The sale was an 18 month process, which we called “Project Josh”, to find a solution to them selling us,’ Grootenhuis says.

‘At one end of the scale, you can either sell to the highest bidder, which will probably be a big institution, and the firm disappears for all intents and purposes. At the other end of the scale you can try and own it yourselves and keep it Johim. Project Josh was about keeping Johim.’

He says both companies knew the transaction had to work for all parties involved and he gives the Swiss bank credit for ‘playing ball’ and accepting the offer from Bermuda National Limited (BNL) and Johim’s management team last August. He admits that Credit Suisse probably could have got more money by selling Johim to a larger institution, but it was aware of the risk that a lot of staff could end up walking out.

The private equity option was also ruled out, with Grootenhuis adamant that the management team did not ‘want to go through this again in three or four years’.

‘The process was long at 18 months, but we were very keen to stick to our wish-list and the management are all in it together,’ Grootenhuis recalls. ‘We all wrote cheques and what’s pleasing is that it’s gone deep into the company. The vast majority of our employees hold shares and all of the directors put in money.’

Indeed, management own 37.5% of the company with BNL, which has since itself rebranded to Somers, owning the rest. For Grootenhuis, Somers is the perfect partner. Meanwhile Duncan Saville and Charles Jillings of Somers’ parent group Utilico are well known to the management team. They are renowned as long-term investors and the tie-up will offer a number of opportunities to distribute through Waverton’s new sister companies.

With so much change at the company, Grootenhuis believes it is a ‘great time to rebrand’, but the truth is that the company also had little choice as the sale of the business triggered a name change clause, prompting the switch.

‘They owned the name, we only ever rented it,’ he says. ‘Why Waverton? We have used Waverton since 2004 as the name of our fund range and they are doing well so it seemed a logical step to adopt it. It also keeps the link to the family. Waverton is the name of the Hambro family home that was built by Jocelyn Hambro.

‘We are not changing things, just hopefully moving the business forward.

‘We did test out the name with some of our clients and they liked it and were familiar with it as they probably have some of our funds in their portfolios. We had other ideas but we always came back to Waverton.’

It also removes a layer of confusion for investors and journalists alike, given the number firms carrying the Hambro monicker. SG Private Banking Hambros, like Waverton, is based in London’s St. James’s Square, with JO Hambro Capital Management and James Hambro & Partners just a couple of streets away.

While the sale of the business and the rebrand may have seen the core of Project Josh’s objectives completed, Grootenhuis insists ‘the journey hasn’t finished.’

‘In reality, the rebranding is part of a much larger journey that started even before Credit Suisse decided to sell us at the beginning of 2012,’ he says.

At the time, the firm was already looking at opportunities to diversify its business. Grootenhuis stresses that while private clients will always be at its core, the lack of scalability when running bespoke portfolios, means strong asset growth can be more easily achieved in other channels.

‘We are very conscious of what our clients want, which is a personal relationship with their manager and not just a relationship manager,’ he says.

‘It makes you less scalable in some ways by definition, but we have quite a lot of fund managers and it makes us a non-commoditised business. Every portfolio is different to meet our clients’ needs.

‘A lot of companies make acquisitions to add assets but when you do that you become commoditised and you lose the factor that won you pitches. Being non-commoditised is what we think is a premium service.

‘There is not a lot of wealth being generated in the UK and if you are winning private client money, you are winning it from another firm. There are a lot of opportunities in institutional, charities and outside of the UK.’

When Credit Suisse put the firm up for sale, Johim was already putting the foundations in place to build out its capabilities to a wider audience.

As part of this drive, it hired a number of global equity managers to overhaul its investment process to ensure that the approach it employed really stood up to institutional scrutiny.

‘It is not just that private clients are becoming more sophisticated, you always need to invest in your investment process and platform,’ Grootenhuis says.

‘The guys we brought in from Deutsche Bank and other places gave us a new investment thesis, and that spins out into the private client world. But we realised there was a chance to have a more institutional offering and raise assets there.’

Private client money makes up the bulk of Waverton’s £4.5 billion assets under management. Around £1 billion sits in its fund range, £350 million in charity money and £200 million is institutional.

Over the last few months the firm has been building its charities and institutional teams and these are expected to be major growth areas for the business moving forward, particularly given parent group Somers’ international connections.

‘The institutional team has only really been in place for six to nine months, but the potential is enormous. We’ve put the investment process and team in place so when we win mandates they go straight to our bottom line because it is scalable,’ Grootenhuis said.

‘Somers have very wide international connections outside of the UK and our institutional team have already been over to Australia. It may be a five year objective but there are a lot of opportunities out there.’

Waverton is also using the office of Bermuda Commercial Bank, which Somers also owns, to offer discretionary fund management from Bermuda in a bid to tap into the foreign wealth domiciled there.

‘We have a marketing manager in their office who acts as a conduit and we will go there at least on a quarterly basis,’ he said.

‘It is a slightly different type of relationship but we do a lot of business internationally already, for example in the Channel Islands, and you don’t need people on the ground. We see it as the same principle but it’s just a bit further away.’

‘We are prepared to travel, that is the nature of being a discretionary manager and even if we do only go over to Bermuda quarterly that is sufficient. They can always ring us too.

‘We are keen to have our investment managers together here because it is important and how ideas get generated. If you have offices elsewhere, you are stretching that investment process.’

And that would also no doubt fly in the face of Project Josh, which he fought so hard to push through.

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